Before us is a
petition for certiorari under Rule 65
in relation to Section 2, Rule 64 of the Rules of Court, seeking to reverse and
set aside the decision[1] dated September 14, 1999 of the
Commission on Audit (COA), affirming the resolution of COA Regional Director Gregoria S. Ong dated March 29,
1994 which in turn affirmed the opinion dated October 19, 1993 of the
Provincial Auditor of Oriental Mindoro, Salvacion M. Dalisay. All three
denied the grant of P1,600 monthly allowance to petitioner Judge Tomas C.
Leynes by the Municipality of Naujan, Oriental Mindoro.

FACTUAL ANTECEDENTS

Petitioner Judge
Tomas C. Leynes who, at present, is the presiding
judge of the RegionalTrialCourtofCalapanCity, Oriental Mindoro,
Branch 40 was formerly assigned to the Municipality of Naujan, Oriental Mindoro
as the sole presiding judge of the Municipal Trial Court thereof.As such, his salary and representation and
transportation allowance (RATA) were drawn from the budget of the Supreme
Court. In addition, petitioner received a monthly allowance of P944 from
the local funds[2]of the Municipality of Naujan starting 1984.[3]

On March
15, 1993, the
SangguniangBayanof Naujan, through Resolution No. 057, sought the
opinion of the Provincial Auditor and the Provincial Budget Officer regarding
any budgetary limitation on the grant of a monthly allowance by the
municipality to petitioner judge. On May 7, 1993, the SangguniangBayanunanimously approved Resolution No.101 increasing petitioner judge’s monthly
allowance from P944 to P1,600 (an increase of P656)
starting May 1993.[4]By virtue of said resolution, the municipal government (the Municipal
Mayor and the SangguniangBayan) approved a supplemental budget which was
likewise approved by the SangguniangPanlalawiganand the Office of Provincial Budget and
Management of Oriental Mindoro. In 1994, the
Municipal Government of Naujan again provided for
petitioner judge’s P1,600 monthly allowance in its annual budget which
was again approved by the SangguniangPanlalawiganand the Office of Provincial Budget and
Management of Oriental Mindoro.[5]

On February
17, 1994,
Provincial Auditor Salvacion M. Dalisay
sent a letter to the Municipal Mayor and the SangguniangBayanofNaujan directing them to stop the payment of
the P1,600 monthly allowance or RATA to petitioner judge and to require
the immediate refund of the amounts previously paid to the latter. She opined
that the Municipality of Naujan could not grant RATA to petitioner
judge in addition to the RATA the latter was already receiving from the Supreme
Court.Her directive was based on the
following:

Section 36, RA
No. 7645, General Appropriations Act of 1993

Representation and
Transportation Allowances. The following officials and those of equivalent rank
as may be determined by the Department of Budget and Management (DBM) while in
the actual performance of their respective functions are hereby granted
monthly commutable representation and transportation allowances payable from
the programmed appropriations provided for their respective offices, not
exceeding the rates indicated below . . .

National
Compensation Circular No. 67 dated January 1, 1992, of the Department of Budget
and Management

Subject:Representation and Transportation Allowances
of National Government Officials and Employees

x xxx xxx xx

4.Funding Source: In all cases,
commutable and reimbursable RATA shall be paid from the amount appropriated for
the purpose and other personal services savings of the agency or project from
where the officials and employees covered under this Circular draw their
salaries. No one shall be allowed to collect RATA from more than one source.[6] (emphasis supplied)

Petitioner judge
appealed to COA Regional Director Gregoria S. Ong who, however, upheld the opinion of Provincial Auditor Dalisay and who added that Resolution No. 101, Series of
1993 of the SangguniangBayanof Naujan failed to comply with Section 3 of
Local Budget Circular No. 53 dated September 1, 1993 outlining the conditions
for the grant of allowances to judges and other national officials or employees
by the local government units (LGUs). Section 3 of
the said budget circular provides that:

Sec. 3 Allowances. ─
LGUs may grant allowances/additional compensation to
the national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following
preconditions:

a.That the annual income
or finances of the municipality, city or province as certified by the
Accountant concerned will allow the grant of the allowances/additional
compensation without exceeding the general limitations for personal services
under Section 325 of RA 7160;

b.ThatthebudgetaryrequirementsunderSection324of RA 7160 including the full requirement of
RA 6758 have been satisfied and provided fully in the budget as certified by
the Budget Officer and COA representative in the LGU concerned;

c.That the LGU has fully
implemented the devolution of personnel/functions in accordance with the
provisions of RA 7160;

d.That the LGU has
already created mandatory positions prescribed in RA 7160; and

e.That similar
allowances/additional compensation are not granted by the national government
to the officials/employees assigned to the LGU.[7]

Petitioner judge
appealed the unfavorable resolution of the Regional Director to the Commission
on Audit. In the meantime, a disallowance of the payment of the P1,600
monthly allowance to petitioner was issued. Thus he received his P1,600
monthly allowance from the Municipality of Naujan only for the period May 1993 to
January 1994.

On September
14, 1999, the
COA issued its decision affirming the resolution of Regional Director Gregoria S. Ong:

The main issue . . .
is whether or not the Municipality of Naujan,
Oriental Mindoro can validly provide RATA to its
Municipal Judge, in addition to that provided by the Supreme Court.

Generally, the grant
of (RATA) [sic] to qualified national government officials and employees
pursuant to Section 36 of R.A. 7645 [General Appropriations Act of 1993] and
NCC No. 67 dated 01 January 1992 is subject to the following conditions to wit:

1.Payable from the
programmed /appropriated amount and others from personal services savings of
the respective offices where the officials or employees draw their salaries;

2.Not exceeding the rates
prescribed by the Annual General Appropriations Act;

3.Officials /employees on
detail with other offices or assigned to serve other offices or agencies shall
be paid from their parent agencies;

4.No one shall be allowed
to collect RATA from more than one source.

On the other hand,
the municipal government may provide additional allowances and other benefits
to judges and other national government officials or employees assigned or
stationed in the municipality, provided, that the finances of the municipality
allow the grant thereof pursuant to Section 447, Par. 1 (xi), R.A. 7160, and
provided further, that similar allowance/additional compensation are not
granted by the national government to the official/employee assigned to the
local government unit as provided under Section 3(e) of Local Budget Circular
No. 53, dated 01 September 1993.

The conflicting
provisions of Section 447, Par. (1) (xi)of the Local Government Code of 1991 and Section 36 of the General
Appropriations Act of 1993 [RA 7645] have been harmonized by the Local Budget
Circular No. 53 dated 01 September 1993, issued by the Department of Budget and
Management pursuant to its powers under Section 25 and Section 327 of the Local
Government Code. The
said circular must be adhered to by the local government units particularly
Section 3 thereof which provides the implementing guidelines of Section 447,
Par. (1) (xi) of the Local Government Code of 1991 in the grant of allowances
to national government officials/employees assigned or stationed in their
respective local government units.

Consequently, the
subject SB Resolution No. 101 dated 11 May 1993 of the SangguniangBayan of Naujan, Oriental Mindoro, having failed to comply with the inherent
precondition as defined in Section 3 (e). . . is null and void.Furthermore, the Honorable Judge Tomas C. Leynes, being a national government official is prohibited
to receive additional RATA from the local government fund pursuant to Section
36 of the General Appropriations Act (R.A. 7645 for 1993) and National
Compensation Circular No. 67 dated 1 January 1992.[8] (emphasis ours)

ASSIGNMENTS OF ERROR

Petitioner judge
filed a motion for reconsideration of the above decision but it was denied by
the Commission in a resolution dated May 30, 2000. Aggrieved, petitioner filed the
instant petition, raising the following assignments of error for our
consideration:

I

WHETHER
OR NOT RESOLUTION NO. 1O1, SERIES OF 1993 OF NAUJAN, ORIENTAL MINDORO, WHICH
GRANTED ADDITIONAL ALLOWANCE TO THE MUNICIPAL TRIAL JUDGE OF NAUJAN, ORIENTAL
MINDORO AND INCREASING HIS CURRENT REPRESENTATION AND TRAVELLING ALLOWANCE
(RATA) TO AN AMOUNT EQUIVALENT TO THAT RECEIVED MONTHLY BY SANGGUNIANG MEMBERS
IN PESOS: ONE THOUSAND SIX HUNDRED (P1,600.00) EFFECTIVE 1993, IS VALID.

II

WHETHER
OR NOT THE POWER OF MUNICIPAL GOVERNMENTS TO GRANT ADDITIONAL ALLOWANCES AND
OTHER BENEFITS TO NATIONAL GOVERNMENT EMPLOYEES STATIONED IN THEIR MUNICIPALITY
IS VERY EXPLICIT AND UNEQUIVOCAL UNDER THE LOCAL GOVERNMENT CODE OF 1991
PARTICULARLY SECTION 447 IN RELATION TO SECTIONS 17 AND 22 THEREOF.

III

WHETHER
OR NOT THE DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) CAN, BY THE ISSUANCE OF
BUDGET CIRCULARS, RESTRICT A MUNICIPAL GOVERNMENT FROM EXERCISING ITS GIVEN
LEGISLATIVE POWERS OF PROVIDING ADDITIONAL ALLOWANCES AND OTHER BENEFITS TO
NATIONAL EMPLOYEES STATIONED OR ASSIGNED TO THEIR MUNICIPALITY FOR AS LONG AS
THEIR FINANCES SO ALLOW.

IV

WHETHER
OR NOT THE LOCAL GOVERNMENT CODE OF 1991 PARTICULARLY SECTION 447 (a) (1) (xi)
WAS EXPRESSLY OR IMPLIEDLY REPEALED OR MODIFIED BY REPUBLIC ACT 7645 AND THE
GENERAL APPROPRIATIONS ACT OF 1993.

V

WHETHER
OR NOT PETITIONER WAS ENTITLED TO RECEIVE THE ADDITIONAL ALLOWANCES GRANTED TO
HIM BY THE MUNICIPALITY OF NAUJAN, ORIENTAL MINDORO BY VIRTUE OF ITS RESOLUTION
NO. 101, SERIES OF 1993.

POSITION OF COA

Respondent
Commission on Audit opposes the grant by the Municipality of Naujan of the P1,600 monthly allowance
to petitioner Judge Leynes for the reason that the
municipality could not grant RATA to judges in addition to the RATA
already received from the Supreme Court.[9] Respondent bases its contention on
the following:

1.National
Compensation Circular No. 67 (hereafter NCC No. 67) dated January 1, 1992 of
the Department of Budget and Management (DBM) which provides that (a) the RATA
of national officials and employees shall be payable from the programmed
appropriations or personal services savings of the agency where such officials
or employees draw their salary and (b) no one shall be allowed to collect RATA
from more than one source;

2.the
General Appropriations Act of 1993 (RA 7645) which provided that the RATA of
national officials shall be payable from the programmed appropriations of their
respective offices and

3.Local
Budget Circular No. 53 (hereafter LBC No. 53) dated September 1, 1993 of the
DBM which prohibits local government units from granting allowances to national
government officials or employees stationed in their localities when such
allowances are also granted by the national government or are similar to
the allowances granted by the national government to such officials or
employees.[10]

POSITION OF PETITIONER

Petitioner judge,
on the other hand, asserts that the municipality is expressly and unequivocally
empowered by RA 7160 (the Local Government Code of 1991) to enact appropriation
ordinances granting allowances and other benefits to judges stationed in its
territory. Section 447(a)(1)(xi) of the Local Government Code of 1991 imposes
only one condition, that is, “when the finances of the municipal government
allow.”The Code does not impose
any other restrictions in the exercise of such power by the municipality.
Petitioner also asserts that the DBM cannot amend or modify a substantive law
like the Local Government Code of 1991 through mere budget circulars.
Petitioner emphasizes that budget circulars must conform to, not modify or
amend, the provisions of the law it seeks to implement.[11]

HISTORY OF
GRANT OF

ALLOWANCES TO JUDGES

The power of local
government units (LGUs) to grant allowances to judges
stationed in their respective territories was originally provided by Letter of
Instruction No. 1418 dated July 18, 1984 (hereafter LOI No. 1418):

Whereas, the State is cognizant of the need
to maintain the independence of the Judiciary;

Whereas, the budgetary allotment of the
Judiciary constitutes only a small percentage of the national budget;

Whereas, present economic conditions
adversely affected the livelihood of the members of the Judiciary;

Whereas, some local government units are
ready, willing and able to pay additional allowances to Judges of various
courtswithin their respective territorial
jurisdiction;

Now, therefore, I, Ferdinand E. Marcos, President of the Republic of the Philippines,
do hereby direct:

1.Section 3 of Letter of
Implementation No. 96 is hereby amended to read as follows:

“3.The
allowances provided in this letter shall be borne exclusively by the National
Government. However, provincial, city and municipal governments may pay
additional allowances to the members and personnel of the Judiciary assigned in
their respective areas out of available local fundsbut not to exceed P1,500.00; Provided, that in Metropolitan
Manila, the city and municipal governments therein may pay additional
allowances not exceeding P3,000.00. (emphasis ours)”[12]

On June
25, 1991, the
DBM issued Circular No. 91-7 outlining the guidelines for the continued receipt
of allowances by judges from LGUs:

Consistent with the
constitutional provision on the fiscal autonomy of the judiciary and the policy
of the National Government of allowing greater autonomy to local government
units, judges of the Judiciary are hereby allowed to continue to receive
allowances at the same rates which they have been receiving from the Local
Government Units as of June 30, 1989, subject to the following guidelines:

1.That the continuance of
payment of subject allowance to the recipient judge shall be entirely voluntary
and non-compulsory on the part of the Local Government Units;

2.That payment of the
above shall always be subject to the availability of local funds;

3.That it shall be made
only in compliance with the policy of non-diminution of compensation received
by the recipient judge before the implementation of the salary standardization;

4. That the subject
allowance shall be given only to judges who were receiving the same as of June
30, 1989 and
shall be co-terminous with the incumbent judges; and

5.That the subject
allowance shall automatically terminate upon transfer of a judge from one local
government unit to another local government unit. (emphasis ours)

On October
10, 1991,
Congress enacted RA 7160, otherwise known as the Local Government Code of 1991.[13] The power of the LGUs
to grant allowances and other benefits to judges and other national officials
stationed in their respective territories was expressly provided in Sections
447(a)(1)(xi), 458(a)(1)(xi) and 468(a)(1)(xi) of the Code.

On March
15, 1994, the
DBM issued Local Budget Circular No. 55 (hereafter LBC No. 55) setting out the
maximum amount of allowances that LGUs may grant to
judges.For provinces and cities, the
amount should not exceed P1,000 and for municipalities, P700.

On December
3, 2002, we struck
down the above circular in Dadole, et al. vs. COA.[14]We ruled there that the Local Government Code of 1991 clearly
provided that LGUs could grant allowances to judges,
subject only to the condition that the finances of the LGUs
allowed it. We held that “setting a uniform amount for the grant of
allowances (was) an inappropriate way of enforcing said criterion.”
Accordingly, we declared that the DBM exceeded its power of supervision over LGUs by imposing a prohibition that did not jibe with the
Local Government Code of 1991.[15]

ESTABLISHED PRINCIPLES INVOLVED

From the foregoing
history of the power of LGUs to grant allowances to
judges, the following principles should be noted:

1.the
power of LGUs to grant allowances to judges has long
been recognized (since 1984 by virtue of LOI No. 1418) and, at present, it is
expressly and unequivocally provided in Sections 447, 458 and 468 of the Local
Government Code of 1991;

2.the
issuance of DBM Circular No. 91-7 dated June 25, 1991 and LBC No. 55 dated March
15, 1994
indicates that the national government recognizes the power of LGUs to grant such allowances to judges;

3.in
Circular No. 91-7, the national government merelyprovidestheguidelinesforthecontinued receipt of
allowances by judges from LGUs while in LBC No. 55,
the national government merely tries to limit the amount of allowances LGUs may grant to judges and

4.in
the recent case of Dadole, et al. vs.
COA,the Court upheld the
constitutionally enshrined autonomy of LGUs to grant
allowances to judges in any amount deemed appropriate, depending on
availability of funds, in accordance with the Local Government Code of 1991.

OUR RULING

We rule in favor
of petitioner judge.Respondent COA
erred in opposing the grant of the P1,600 monthly allowance by the Municipality of Naujan to petitioner Judge Leynes.

DISCUSSION OF OUR RULING

Section
447(a)(1)(xi) of RA 7160, the Local Government Code of 1991, provides:

(a)The sangguniangbayan, as the legislative body of the municipality, shall
enact ordinances, approve resolutions and appropriate funds for the general
welfare of the municipality and its inhabitants . . ., and shall:

(1)Approve ordinances and pass
resolutions necessary for an efficient and effective municipal government, and
in this connection shall:

x xxx xxx
xx

(xi) When the
finances of the municipal government allow, provide for additional
allowances and other benefits to judges, prosecutors, public elementary and
high school teachers, and other national government officials stationed in or
assigned to the municipality; (emphasis ours)

Respondent COA,
however, contends that the above section has been repealed, modified or amended
by NCC No. 67 dated January 1, 1992, RA 7645 (the General Appropriations
Act of 1993) and LBC No. 53 dated September 1, 1993.[16]

It is elementary in statutory construction that an administrative
circular cannot supersede, abrogate, modify or nullify a statute. A statute is
superior to an administrative circular, thus the latter cannot repeal or amend
it.[17]
In the present case, NCC No. 67, being a mere administrative circular, cannot
repeal a substantive law like RA 7160.

It is also an elementary principle in statutory construction that
repeal of statutes by implication is not favored, unless it is manifest that
the legislature so intended. The legislature is assumed to know the existing
laws on the subject and cannot be presumed to have enacted inconsistent or
conflicting statutes.[18]
Respondent COA alleges that Section 36 of RA 7645 (the GAA of 1993) repealed
Section 447(a)(l)(xi) of RA 7160 (the LGC of 1991).A review of the two laws, however, shows that
this was not so.Section 36 of RA 7645
merely provided for the different rates of RATA payable to national government
officials or employees, depending on their position, and stated that these
amounts were payable from the programmed appropriations of the parent agencies
to which the concerned national officials or employees belonged. Furthermore,
there was no other provision in RA 7645 from which a repeal of Section 447(a)
(l)(xi) of RA 7160 could be implied. In the absence, therefore, of any clear
repeal of Section 447(a)(l)(xi) of RA 7160, we cannot presume such intention on
the part of the legislature.

Moreover, the presumption against implied repeal becomes stronger
when, as in this case, one law is special and the other is general.[19]
The principle is expressed in the maxim generaliaspecialibus non derogant, a
general law does not nullify a specific or special law. The reason for this is
that the legislature, in passing a law of special character, considers and
makes special provisions for the particular circumstances dealt with by the
special law. This being so, the legislature, by adopting a general law
containing provisions repugnant to those of the special law and without making
any mention of its intention to amend or modify such special law, cannot be
deemed to have intended an amendment, repeal or modification of the latter.[20]

In this case, RA 7160 (the LGC of 1991) is a special law[21]
which exclusively deals with local government units (LGUs),
outlining their powers and functions in consonance with the constitutionally
mandated policy of local autonomy.RA
7645 (the GAA of 1993), on the other hand, was a general law[22]
which outlined the share in the national fund of all branches of the national
government. RA 7645 therefore, being a general law, could not have, by mere
implication, repealed RA 7160. Rather, RA 7160 should be taken as the exception
to RA 7645 in the absence of circumstances warranting a contrary conclusion.[23]

The controversy actually centers on the seemingly sweeping
provision in NCC No. 67 which states that “no one shall be allowed to collect
RATA from more than one source.” Does this mean that judges cannot receive
allowances from LGUs in addition to the RATA from the
Supreme Court? For reasons that will hereinafter be discussed, we answer in the
negative.

The pertinent provisions of NCC No. 67 read:

3. Rules and Regulations:

3.1.1Payment of RATA, whether commutable or
reimbursable, shall be in accordance with the rates prescribed for each of the
following officials and employees and those of equivalent ranks, and the
conditions enumerated under the pertinent sections of the General Provisions of
the annual General Appropriations Act (GAA):

x xxx
xxx xx

4. Funding Source:

In all cases, commutable and reimbursable RATA shall be paid
from the amount appropriated for the purpose and other personal services
savings of the agency or project from where the officials and employees covered
under this Circular draw their salaries. No one shall be allowed to collect
RATA from more than one source. (emphasis ours)

In construing NCC No. 67, we apply the principle in statutory
construction that force and effect should not be narrowly given to isolated and
disjoined clauses of the law but to its spirit, broadly taking all its
provisions together in one rational view.[24]
Because a statute is enacted as a whole and not in parts or sections, that is,
one part is as important as the others, the statute should be construed and
given effect as a whole. A provision or section which is unclear by itself may
be clarified by reading and construing it in relation to the whole statute.[25]

Taking NCC No. 67 as a whole then, what it seeks to prevent is
the dual collection of RATA by a national official from the budgets of “more
than one national agency.” We emphasize that the other source referred
to in the prohibition is another national agency. This can be gleaned
from the fact that the sentence “no one shall be allowed to collect RATA from
more than one source” (the controversialprohibition) immediately follows the sentence that RATA shall be paid
from the budget of the national agency where the concerned national officials and
employees draw their salaries. The fact that the other source is another
national agency is supported by RA 7645 (the GAA of 1993) invoked by respondent
COA itself and, in fact, by all subsequent GAAs for
that matter, because the GAAs all essentially provide
that (1) the RATA of national officials shall be payable from the budgets of
their respective national agencies and (2) those officials on detail with other
national agencies shall be paid their RATA only from the budget of their parent
national agency:

Section 36, RA 7645, General Appropriations Act of 1993:

Representation and
Transportation Allowances. The following officials and those of equivalent rank
as may be determined by the Department of Budget and Management (DBM) while in
the actual performance of their respective functions are hereby granted monthly
commutable representation and transportation allowances payable from the
programmed appropriations provided for their respective offices, not exceeding
the rates indicated below, which shall apply to each type of allowance:

x xxx
xxx xx

Officials on detail with
other offices, including officials of the Commission of Audit assigned to serve
other offices or agencies, shall be paid the allowance herein authorized from
the appropriations of their parent agencies. (emphasis ours)

Clearly therefore, the
prohibition in NCC No. 67 is only against the dual or multiple collection of
RATA by a national official from the budgets of two or more national
agencies.Stated otherwise, when a
national official is on detail with another national agency, he should get his
RATA only from his parent national agency and not from the other national
agency he is detailed to.

Since the other source referred in the controversial
prohibition is another national agency, said prohibition clearly does
not apply to LGUs like the Municipality
of Naujan.
National agency of course refers to the different offices, bureaus and
departments comprising the national government.The budgets of these departments or offices are fixed annually by
Congressin the General Appropriations
Act.[26]
An LGU is obviously not a national agency. Its annual budget is fixed by its
own legislative council (SangguniangBayan, Panlungsodor
Panlalawigan), not by Congress. Without doubt,
NCC No. 67 does not apply to LGUs.

The prohibition in NCC No. 67 is in fact an administrative tool
of the DBM to prevent the much-abused practice of multiple allowances, thus
standardizing the grant of RATA by national agencies. Thus, the purpose clause
of NCC No. 67 reads:

This Circular is being issued to ensure uniformity and consistency
of actions on claims for representation and transportation allowance (RATA)
which is primarily granted by law to national government officials and
employees to cover expenses incurred in the discharge or performance of their
duties and responsibilities.

By no stretch of the imagination can NCC No. 67 be construed as
nullifying the power of LGUs to grant allowances to
judges under the Local Government Code of 1991. It was issued primarily to make
the grant of RATA to national officials under the national budget uniform. In
other words, it applies only to the national funds administered by the DBM, not
the local funds of LGUs.

To rule against the power of LGUs to
grant allowances to judges as what respondent COA would like us to do will
subvert the principle of local autonomy zealously guaranteed by the
Constitution.[27]
The Local Government Code of 1991 was specially promulgated by Congress to
ensure the autonomy of local governments as mandated by the Constitution. By
upholding, in the present case, the power of LGUs to
grant allowances to judges and leaving to their discretion the amount of
allowances they may want to grant, depending on the availability of local
funds, we ensure the genuine and meaningful local autonomy of LGUs.

We now discuss the next contention of respondent COA: that the resolution of the SangguniangBayanof
Naujan granting the P1,600 monthly allowance
to petitioner judge was null and void because it failed to comply with LBC No.
53 dated September 1, 1993:

Sec. 3 Allowances. ─
LGUs may grant allowances/additional compensation to
the national government officials/employees assigned to their locality at rates
authorized by law, rules and regulations and subject to the following
preconditions:

a.That the annual
income or finances of the municipality, city or province as certified by the
Accountant concerned will allow the grant of the allowances/additional
compensation without exceeding the general limitations for personal services
under Section 325 of RA 7160;

b.That the budgetary requirements
under Section 324 of RA 7160 including the full requirement of RA 6758 have
been satisfied and provided fully in the budget as certified by the Budget
Officer and COA representative in the LGU concerned;

c.That the LGU has
fully implemented the devolution of personnel/functions in accordance with the
provisions of RA 7160;

d.That the LGU has
already created mandatory positions prescribed in RA 7160.

e.That similar
allowances/additional compensation are not granted by the national government
to the officials/employees assigned to the LGU.

Though LBC No. 53
of the DBM may be considered within the ambit of the President's power of
general supervision over LGUs,[28] we rule that Section 3, paragraph (e)
thereof is invalid. RA 7160, the Local Government Code of 1991, clearly
provides that provincial, city and municipal governments may grant allowances
to judges as long as their finances allow.Section 3, paragraph (e) of LBC No. 53, by outrightly
prohibiting LGUs from granting allowances to judges
whenever such allowances are (1) also granted by the national government or (2)
similar to the allowances granted by the national government, violates Section
447(a)(l)(xi) of the Local Government Code of 1991.[29] As already stated, a circular must
conform to the law it seeks to implement and should not modify or amend it.[30]

Moreover, by
prohibiting LGUs from granting allowances similar
to the allowances granted by the national government, Section 3 (e) of LBC No.
53 practically prohibits LGUs from granting
allowances to judges and, in effect, totally nullifies their statutory power to
do so. Being unduly restrictive therefore of the statutory power of LGUs to grant allowances to judges and being violative of their autonomy guaranteed by the Constitution,
Section 3, paragraph (e) of LBC No. 53 is hereby declared null and void.

Paragraphs (a) to
(d) of said circular, however, are valid as they are in accordance with
Sections 324[31] and 325[32] of the Local Government Code of 1991;
these respectively provide for the budgetary requirements and general
limitations on the use of provincial, city and municipal funds. Paragraphs (a)
to (d) are proper guidelines for the condition provided in Sections 447, 458
and 468 of the Local Government Code of 1991 that LGUs
may grant allowances to judges if their funds allow.[33]

Respondent COA
also argues that Resolution No. 101 of the SangguniangBayan of Naujan failed to comply with paragraphs (a) to (d) of LBC
No. 53, thus it was null and void.

The argument is
misplaced.

Guidelines (a) to
(d) were met when the SangguniangPanlalawiganof Oriental Mindoro
approved Resolution No. 101 of the SangguniangBayanof Naujan
granting the P1,600 monthly allowance to petitioner judge as well as the
corresponding budgets of the municipality providing for the said monthly
allowance to petitioner judge.Under
Section 327 of the Local Government Code of 1991, the SangguniangPanlalawigan was specifically tasked to review
the appropriation ordinances of its component municipalities to ensure compliance
with Sections 324 and 325 of the Code. Considering said duty of the SangguniangPanlalawigan,
we will assume, in the absence of proof to the contrary, that the SangguniangPanlalawiganof Oriental Mindoro performed what the law
required it to do, that is, review the resolution and the corresponding budgets
of the Municipality of Naujan to make sure that they
complied with Sections 324 and 325 of the Code.[34] We presume the regularity of the SangguniangPanlalawigan’s
official act.

Moreover, it is
well-settled that an ordinance must be presumed valid in the absence of
evidence showing that it is not in accordance with the law.[35] Respondent COA had the burden of
proving that Resolution No. 101 of the SangguniangBayan of Naujan did not
comply with the condition provided in Section 447 of the Code, the budgetary
requirements and general limitations on the use of municipal funds provided in
Sections 324 and 325 of the Code and the implementing guidelines issued by the
DBM, i.e., paragraphs (a) to (d), Section 3 of LBC No. 53.Respondent COA also had the burden of showing
that the SangguniangPanlalawigan
of Oriental Mindoro erroneously approved said
resolution despite its non-compliance with the requirements of the law. It
failed to discharge such burden.On the
contrary, we find that the resolution of the Municipality of Naujan granting the P1,600 monthly
allowance to petitioner judge fully complied with the law. Thus, we uphold its
validity.

In sum, we hereby
affirm the power of the Municipality of Naujan to grant the questioned allowance to
petitioner Judge Leynes in accordance with the
constitutionally mandated policy of local autonomy and the provisions of the
Local Government Code of 1991. We also sustain the validity of Resolution No.
101, Series of 1993, of the SangguniangBayanof Naujan for being in
accordance with the law.

WHEREFORE,
the petition is hereby GRANTED.The
assailed decision dated September 14, 1999 of the Commission of Audit is hereby
SET ASIDE and Section 3, paragraph (e) of LBC No. 53 is hereby declared NULL
and VOID.

[9]
Respondent COA erroneously considered the P944 monthly allowance
being received by petitioner judge from the local funds of the municipality
since 1984 as RATA from the Supreme Court. Thus, in 1993 when the municipality
increased said allowance to P1,600 (an increase of P656), COA
opposed the grant of the whole P1,600 monthly allowance because the
municipality supposedly could not grant RATA to petitioner judge in addition to
the RATA already granted by the Supreme Court.See Comment dated October 23,
2000 and Memorandum dated June
26, 2001, Rollo, pp. 53,
103.

[12]
In Allardevs.
Commission on Audit, 218 SCRA 227 [1993], we ruled that the use of the
word“may” in LOI No. 1418 signifies
that the allowance may not be demanded as a matter ofright, but

is entirely
dependent on the will of the municipality concerned. It should be treated as
anhonorarium, an amount that is “given
not as a matter of obligation but in appreciation of services rendered, a
voluntary donation in consideration for services which admit of no compensation
in money (Santiago vs. Commission on
Audit, 199 SCRA 128, 130).”

[15]Instead
of filing a comment on behalf of respondent COA in this case, the Solicitor
General filed a manifestation supporting the position of petitioner judges.
The Solicitor General argued that (1) DBM only enjoyed the power to review and
determine whether disbursement of funds were made in accordance with the
ordinance passed by a LGU while (2) the COA had no more than auditorial visitation powers over the LGUs
pursuant to Section 348 of RA 7160 which provides
for the power to inspect at any time the financial accounts of LGUs. Moreover, the Solicitor General opined that “the DBM
and the respondent are only authorized under RA 7160 to promulgate a Budget
Operations Manual for LGUs, to improve and
systematize methods, techniques and procedures employed in budget preparation,
authorization, execution and accountability” pursuant to Section 354 of RA
7160. The Solicitor General pointed out that LBC 55 was not exercised under any
of the aforementioned provisions.

[21]
A special law is one which relates to particular persons or things of a class,
or to a particular portion or section of the state only. U.S.vs.Serapio,
23 Phil 584 [1912].

[22] A
general law is one which affects all people of the state or all of a particular
class of persons in the state or embraces a class of subjects or places and
does not omit any subject or place naturally belonging to such class. U.S.vs.Serapio,
23 Phil 584 [1912];Valeravs.Tuason,80Phil
823 [1948]; Villegas vs.Subido, 41 SCRA 190 [1971].

[28]The LBC No. 53 was issued by the DBM
by virtue of Administrative Order No. 42 which clarified

the role of
the DBM in the administration of the compensation and position classification
systems in the LGUs and mandated it, among other
things, to provide guidelines for the
grant of allowances and additional forms of compensation by the LGUs. AO No. 42 was issued by the President by virtue of
his power of general supervision over the LGUs under
Section 25 of the Local Government Code of 1991.

[29]
Also Section 458(a)(1)(xi) and Section 468(a)(1)(xi), Local Government Code of
1991.

(b)Full provision shall be made for all
statutory and contractual obligations of the local government unit concerned:
Provided, however, that the amount of
appropriations for debt servicing shall not exceed twenty percent (20%) of the
regular income of the local government unit concerned;

(c)In the case of provinces, cities, and
municipalities, aid to component barangays shall be
provided in amounts of not less than
One thousand pesos (P1,000.00) per barangay; and

(d)Five percent (5%) of the estimated
revenue from regular sources shall be set aside as an annual lump sum
appropriation for unforeseen expenditures arising from the occurrence of
calamities: Provided, however, that
such appropriation shall be used only in the area, or a portion thereof, of the
local government unit or other areas declared in a state of calamity by the
President.

[32]Section 325. General Limitations. -
The use of the provincial, city and municipal funds shall be subject to the
following limitations:

(a)The total appropriations, whether annual
or supplemental, for personal services of a local government unit for one (1)
fiscal year shall not exceed forty-five (45%) in the case of first to third
class provinces, cities, and municipalities, and fifty-five percent (55%) in
the case of fourth class or lower, of the total annual income from regular
sources realized in the next preceding fiscal year. The appropriations for
salaries, wages, representation and transportation allowances of officials and
employees of the public utilities and economic enterprises owned, operated, and
maintained by the local government unit concerned shall not be included in the
annual budget or in the computation of the maximum amount for personal
services. The appropriations for the personal services of such economic
enterprises shall be charged to their respective budgets;

(b)No official or employee shall be
entitled to a salary rate higher than the maximum fixed for his position or
other positions of equivalent rank by applicable laws or rules and regulations
issued thereunder;

(c)No local fund shall be appropriated to
increase or adjust salaries or wages of officials and employees of the national
government, except as may be expressly authorized by law;

(d)In cases of abolition of positions and
the creation of new ones resulting from the abolition of existing positions in
the career service, such abolition or creation shall be made in accordance with
pertinent provisions of this code and the civil service law, rules and
regulations;

(e)Positions in the official plantilla for career positions which are occupied by
incumbents holding permanent appointments shall be covered by adequate
appropriations;

(f)No changes in designation or
nomenclature of positions resulting in a promotion or demotion in rank or
increase or decrease in compensation shall be allowed, except when the position
is actually vacant, and the filling of such positions shall be strictly made in
accordance with the civil service law, rules and regulations;

(g)The creation of new positions and salary
increases or adjustments shall in no case be made retroactive; and

(h)The annual appropriations for
discretionary purposes of the local chief executive shall not exceed two
percent (2%) of the actual receipts derived from basic real property tax in the
next preceding calendar year. Discretionary funds shall be disbursed only for
public purposes to be supported by appropriate vouchers and subject to such
guidelines as may be prescribed by law. No amount shall be appropriated for the
same purpose except as authorized under this Section.

[33]
Paragraph (a) should be read in conjunction with the recent circular of the
DBM, Local Budget

Circular No. 75 dated July 12, 2002 entitled Guidelines on Personal Services
Limitation. Section 5.5 thereof entitled Honoraria of National Government
Personnel provides: “The
appropriation intended to be granted as honoraria and similar benefits to
national government personnel shall be classified as Maintenance and Other
Operating Expenses (MOOE) since these are not personal services costs of the
local government unit.”